“Take this job and shove it.” That’s an oft-quoted lyric from the recording artist Johnny Paycheck. For generations, worker bees stuck filing away the hours of their lives behind drab cubicles have long wished to utter those words to their boss. But the broader effects of the Covid-19 pandemic have finally given the corporately aggrieved liquid courage, boding well for gig economy stocks.
Now let me do a hard stop before proceeding forward. Personally, I have questions about the magnitude of the so-called Great Resignation. For instance, the median household savings was $5,300 in 2019, which is a solid figure, but let’s face it: you don’t want to tell your boss to shove it with just five large in the bank. Still, I’m generally optimistic about gig economy stocks, irrespective of what happens in the traditional workforce.
Keep in mind that right before the Covid-19 crisis, a CNBC report published on Feb. 4, 2020 cited information from ADP Research, which reported that the “gig economy has ballooned by 6 million people since 2010.” Interestingly enough, it’s not just a young person’s phenomenon, with nearly a third of certain independent contractors over the age of 55. On paper, that’s a strong backdrop for gig economy stocks.
To be fair, CNBC doesn’t paint an entirely rosy picture. For instance, the presence of older workers suggest ageism is becoming more common. At the same time, discrimination involving the full spectrum of immutable characteristics is unfortunately difficult to prove. With the robust ecosystem of independent contract opportunities, older workers at least have a fighting chance. Naturally, this dynamic also helps gig economy stocks.
But let’s get to the heart of the matter. The Covid-19 crisis has taught people that there are more important things in life than Excel spreadsheets. With worker shortages still imposing challenges for the post-pandemic recovery process, individual workers finally find themselves in the driver’s seat. That may very well be a positive for these gig economy stocks.
- Upwork (NASDAQ:UPWK)
- Fiverr (NYSE:FVRR)
- Uber (NYSE:UBER)
- Lyft (NASDAQ:LYFT)
- Airbnb (NASDAQ:ABNB)
- Rover Group (NASDAQ:ROVR)
- Freelancer (OTCMKTS:FLNCF)
When assessing gig economy stocks as a whole, it may help to consider individual states’ political profile. For instance, California has stringent policies on who is actually a gig worker or not. Because laws can either make or break the rise of independent contractors, it’s always helpful to monitor business headlines.
Gig Economy Stocks to Buy: Upwork (UPWK)
An online marketplace for freelancers, Upwork connects companies that are seeking to fill specific needs — especially from those who are not yet ready to seek a long-term commitment — with gig workers that offer the requested skills. Essentially, UPWK is one of the most ideal gig economy stocks because it allows individuals to leverage their education, training or talents.
Further, the company is delivering the goods fundamentally. For its recent third-quarter earnings report, Upwork posted revenue of $128.1 million, up 32% against the year-ago quarter. “Non-GAAP net income was $4.8 million and non-GAAP net income per diluted share was $0.04,” per a report from ZDNet. Covering analysts anticipated earnings per share to come in at a loss of 10 cents.
However, the guidance dampened the overall picture. “For the current quarter, the company sees revenue between $130 million and $132 million and raised its full-year 2021 revenue guidance to between $496 million and $498 million.” Still, it “expects a non-GAAP basic loss per share to be between $0.03 and $0.05 in Q4.” Unfortunately, the news saw UPWK stock tumble.
Frankly, this may be a case of excessive bearishness. With more workers flexing their muscles, it’s very possible that gig economy stocks will rise — and UPWK is among the most popular.
Another online freelance marketplace, Fiverr has been one of the best investments to make on a longer-term scale and actually, the wait hasn’t been that long for those who bought near the company’s initial public offering. True, FVRR didn’t get off to the most auspicious start. But when the dust cleared, its current lifetime return stands at nearly 447%.
While I’m personally pensive about buying into strength, FVRR still presents a compelling deal among established gig economy stocks. In February of this year, the equity unit closed up over $323, representing an all-time record. From that perspective, FVRR is almost trading at a half-off discount.
Currently, shares are in a consolidation phase, which implies either a breakout or breakdown at the culmination point. So long as workers continue to hold out against traditional employment, it will take a brave contrarian to bet against gig economy stocks.
As multiple media reports indicate, many employees are fed up with their working conditions and inflexible schedules. Therefore, companies like Fiverr may offer an attractive solution for talented individuals seeking a shift away from the cubicles.
Gig Economy Stocks to Buy: Uber (UBER)
Simultaneously, Uber is one of the most fascinating gig economy stocks and also among the most controversial. On the positive end, Uber really pioneered the concept of ride-hailing and the sharing economy as a whole, an “economic system in which assets and services are shared between private individuals.”
At the same time, the company has found itself afoul of labor laws of various jurisdictions. At issue is whether an Uber driver is truly working independently or is actually an employee, with Uber improperly classifying them as independent for favorable tax treatment and the avoidance of paying benefits. It’s a tricky issue, because gig workers by default have control over how they provide the service or product a client is seeking.
In Uber’s case, you can make arguments for both sides, adding perplexity to the issue. Nevertheless, it’s very much one of the transformative gig economy stocks because the platform ultimately allows anyone to leverage their assets to make money.
Further, with the company branching out to other services such as restaurant and grocery deliveries, UBER has become tremendously relevant in this digital age.
As Uber’s main rival, Lyft has benefitted substantially from the broader acceptance of ride-hailing. According to a January 2019 report from the Pew Research Center, more Americans are taking advantage of ride-hailing apps. As you would expect, younger people have embraced the concept the most. However, the biggest percentage change is among older Americans.
For instance, between 2015 and 2018, survey respondents ages 30 to 49 saw an increase in the number of people who stated they used ride-hailing services at least once, to 43% from 19%. But among the 50-plus crowd, the percentage jumped to 24% from 7%.
Why is this important? Earlier this year, gig economy stocks related to the ride-hailing industry suffered a hit when Labor Secretary Marty Walsh stated that platform drivers are employees under federal law. Of course, that’s problematic for the underlying business model, which depends on “come-as-you-are” flexibility.
While that’s not an encouraging matter for LYFT stock, that Americans across the board are embracing the conveniences of the gig economy suggests that the Biden administration can’t afford to be so draconian on individual choices. After all, nobody forced anybody to drive for Lyft or Uber.
Gig Economy Stocks to Buy: Airbnb (ABNB)
From a personal perspective, Airbnb is a controversial inclusion on this list of gig economy stocks. I haven’t exactly been optimistic about its prospects because of the Covid-19 pandemic. In hindsight, my pensiveness was not justified, though to be fair, ABNB has gone through multiple gyrations that surely made some stakeholders queasy.
Around the middle of February, ABNB found itself up 47% for the year, which is hugely impressive. But the enthusiasm quickly tumbled only to rise again, albeit in a comparatively subdued manner. At the time of this writing, shares are up over 19% YTD, which is still a very solid performance.
If you believe in the power and relevance of gig economy stocks, you might want to give Airbnb a look, even if I might not join in on the fun. For one thing, American society is basically back to normal, which means the fear of infection isn’t nearly as pronounced of a headwind for ABNB.
In addition, the soaring housing market implies that many people have second homes that they could rent off to vacationers. Frankly, that’s what gig economy stocks are all about.
Rover Group (ROVR)
Americans love their pets. Despite the disruption of the pandemic, 2020 sales for the U.S. pet industry amounted to $103.6 billion. That was up nearly 7% from 2019’s tally of $97.1 billion. Thanks to the vaccination rollout and much-improved economic performance (at least relative to the worst of the crisis), this sector appears to be in very good hands.
Honestly, it’s downright un-American to not love our four-legged family members. However, millennials have really taken this sentiment to the max, with YPulse reporting that 76% of millennials have pets. Within this figure, over half report that they have dogs, which serves the core business of Rover Group quite well.
Billed as the “world’s largest online marketplace for pet care,” Rover particularly specializes in connecting pet sitters and dog walkers with busy households. Assuming that management can hit its key long-term strategic goals, ROVR could turn out to be a wise investment.
For starters, the Great Resignation has seen many people looking to trade cubicles for fulfilling work. I’d say spending time outdoors with dogs is much more fulfilling than looking at spreadsheets all day. Also, demand for such services is robust due to the generational penchant for pet ownership.
Gig Economy Stocks to Buy: Freelancer (FLNCF)
As a cryptocurrency investor, I have a natural eye for dog doodoo, the kind that hopefully allows you to earn lifechanging profitability but also runs the risk of losing it all. Fortunately, I haven’t had much experience with the latter, although with Freelancer, you should be prepared for anything.
I’m going to be straight up with you: FLNCF stock is wildly risky. Priced at 55.6 cents as I write this, it theoretically has significant upside potential due to the law of small numbers. At the same time, you’ve got to ask yourself how the underlying company got itself into this position in the first place.
A cursory look suggests that investors may be disappointed with the trailing-12-month revenue of $43 million, which is down 2.8% from 2020 revenue. And as an over-the-counter play, you’ve got to watch the wide bid-ask spread, meaning you’re going to need strong upside before you can attain net profitability.
That aside, Freelancer is tied to the Australian freelance market, with offices in Vancouver, London, Buenos Aires, Manila and Jakarta. Likely, a contributing factor for FLNCF’s cheap rate is the uncertainty of whether the gig economy will catch on in the market it serves.
Still, if you want to take a speculative pot shot with gig economy stocks, this is your chance.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.